The Pentagon made some of its recommendations for the restructuring of military installations yesterday:

The Pentagon on Friday recommended closing 33 major domestic U.S. military bases and restructuring 29 others, dealing a hard economic blow to many communities across the country.

New England was the hardest hit region and the South was the biggest gainer. States among the biggest losers were Maine, Connecticut, New Jersey and South Dakota. Winners included Texas, Maryland and Georgia, although the Atlanta area was hit hard.

…

The bases are vital economic engines in many communities, which mounted frantic lobbying efforts to save their local bases, and will now try to convince the commission that the Pentagon erred and to spare ones scheduled to close.

This was the expected reaction, of course; and understandable it is, too. Unfortunately, it’s not possible to restructure without reallocating resources (though Japanese companies and government bodies give it the old college try).

Speaking of Japan–do I ever not?–its part in the restructuring is taking shape, also:

Japan and the United States have agreed to step up efforts on joint operations and cooperation in the event of a military emergency in Japan. This would include allowing some Japanese facilities, such as harbors and airports, to be used by the U.S. military.

…

In doing so, Tokyo hopes to strike a deal with Washington to reduce U.S. bases here, sources said.

The plan is part of continuing discussions on the global transformation of the U.S. military.

Japanese and U.S. officials are discussing how to divide the roles and duties of the U.S. military and the Self-Defense Forces.

Military emergencies would include a flare-up between China and Taiwan.

In the event of such a crisis, the government believes that allowing U.S. forces to use civilian facilities would ensure closer mutual cooperation, the sources said.

Under this scenario, Tokyo would offer the use of certain airports and harbors to U.S. forces.

With this offer, Tokyo hopes the Pentagon will become more receptive to eliminating certain U.S. facilities in Japan.

In discussions on cutting the U.S. base presence, Japanese officials have asked that those not in active use be returned to Japan. However, U.S. officials insist the facilities are needed in a military emergency.

Notice, toward the bottom of the article, an indication that one of the problems with this agreement has been the failure of the federal government to coordinate effectively with local governments here in Japan. That sort of thing happens very frequently–it’s also been a hilarious coda to the fanfare surrounding the Kyoto Protocols. I point this out not to rag on Japan–every social system of 125 million people is going to have its weak points. It’s just that people frequently seem to have the impression that Japanese conformism and the post-War success of Japan, Inc., mean that the government functions like one gigantic well-oiled machine. But you get dissent in the ranks and stonewalling by locals here, too.



On a related note, the joint missile defense system is progressing, but, then, I think it only requires the cooperation of the Defense Agency.

Not many updates on Akihiko Saito, the presumed Japanese abductee in Iraq. The latest Nikkei report I’ve seen was posted this morning; it contributes no new information other than that his company believes, based on the testimony of eyewitnesses, he may actually have been fatally wounded in the original attack on his convoy. The Mainichi‘s English version is here.

A Japanese national has been abducted in Iraq, as the Yomiuri‘s Cairo bureau appears to have found out from Reuters (whose current story on the subject is here). The Asahi gives his name as Akihito Saito.

The Ministry of Foreign Affairs received word at 5:30 a.m. today from the British security firm Hart Security, Ltd., that Akihiko Saito (44), who was working as a consultant at its Iraq office, has been attacked and that his whereabouts are unknown.

The article says that the report was specifically received by the 対策本部 (taisaku-honbu: “measures [taken in response to a situation]” + “head office”), which is the division of Foreign Ministry headquarters that deals with reports of attacks on Japanese citizens abroad. It’s chaired directly by Nobutaka Machimura, the Foreign Minister. Machimura and the Ministry of Defense have stated that they have received no demands from the abductors and that there are no plans to change Japan’s Iraq policy in response.

The Asahi reports that the terrorist (“militant” if you’re just coming back from the Reuters link and need a minute to adjust) group Ansar al-Sunna has posted an image of Saito’s passport on its website and stated that he was seriously injured in an ambush on a vehicle that had just left the Assad US Army Base. Of the 17 people captured, including 12 Iraqis, all but Saito have been killed. (The way it’s phrase, it looks as if they were executed after capture, not killed in the attack on the vehicles itself.)

While my attention has been diverted elsewhere, the Yomiuri has been following the Japan Post privatization proposal through its most recent travails (part 1, part 2, part 3). I’m remiss in not having drawn your attention to it earlier, because it’s a very good, accessible summary of where things are at this point. Predictable problems have been cropping up, since the bills have been submitted but have yet to go through the Diet.

Part 2 in the series is the one that has the most concrete information about what’s being haggled over. Interestingly, if not exactly surprisingly given the political delicacy of the issue, Heizo Takenaka, who was hand-picked by PM Koizumi to be the minister in charge of orchestrating the Japan Post privatization, has dropped his usual habit of bluntness and bombthrowing and is taking a more oblique line.

One contentious issue is how long the semi-governmental holding company will retain its shares in the four new companies that actually render services (package handling, savings, insurance, and window services). From Koizumi’s perspective, the idea is that the holding company is supposed to sell all its shares by 2017. The possibility that has now been raised is that it can buy them back the next year:

LDP Policy Research Council Chairman Kaoru Yosano also said Monday, “The important thing is that the holding company will be a shareholder in 2017 and in 2018 as well.”

Once the holding company sells all its shares in the postal savings and insurance companies, they will be considered as private entities, with no restrictions on their operations. If the sale is completed during the early years of the privatization process–which begins in 2007–the firms could take up new profitable businesses, such as lending.

However, such a compromise may have a detrimental impact on existing private operators.

Yes, they might actually have to compete for customers, and, sakes alive, we would NOT WANT THAT.

Personally, I’m kind of wondering what reason a holding company that was incorporated for the express purpose of tiding the four new service companies over during the transition would have for existing after the transition was completed. You can tell I’m not a bureaucrat.

Another, related problem (if you think in terms of free markets) is this:

Also, the government and the LDP have been divided over a fund to be managed by the holding company with the aim of ensuring the uniform provision of postal savings and life insurance services nationwide.

As the relevant bill submitted to the Diet stipulates the holding company can establish a fund of up to 1 trillion yen, the amount of the fund is unchanged from the initial government plan. But the government and the LDP agreed that the company could keep up to 2 trillion yen in the fund.

…

The fund is intended to allow unprofitable post offices to continue providing financial services. The LDP’s request to increase its size is aimed at protecting the network of post offices by ensuring the universal service obligation applies not only to mail delivery, but also to banking.

So now we’re going to pony up for banking services in every municipality from Chiyoda Ward to darkest Hokkaido, and we’re going to insulate the providers from feeling the heat for their bad investment decisions. I doubt it’s meant that way, of course; the idea is probably just to help far-flung outlets cover operations costs. But we’re talking about a large pile of government-guaranteed money here. You can bet the urn full of grandma’s ashes that it won’t take long for savvy operators to figure out how to make bad debt and money-pit investments look like the necessary ineffiencies of being the only post office at the top of an underpopulated mountain.

Takenaka, as noted above, is waving all this away:

Heizo Takenaka, the minister responsible for postal privatization, reportedly said he had no intention of revising the bill, and the issue of the fund would be a business decision to be made in the future.

…

The issue could determine the basic scheme of privatization. Takenaka’s remark that the issue will be a business decision does not seem to reflect his real intention. Instead, he has just postponed dealing with the issue.

Well, we all know how well it goes when you “privatize” a critical service by creating a soup of government guarantees and nebulous divisions of accountability and just kind of figure that logistics aren’t going to interfere, don’t we?

This Nikkei headline about the DPRK’s missile test yesterday gives some indication of why English translations of Japanese always seem to double the length of the passage in question:

北朝鮮ミサイル実験、日中韓ロと警告へ・米首席補佐官

That 日中韓ロ part in the middle stands for “Japan, China, the ROK, and Russia.” The whole thing literally reads, “US Chief of Staff with Japan, PRC, ROK, Russia toward warning on DPRK missile test.” Naturalized, it might go, “US to join Japan, PRC, ROK, and Russia in warning DPRK about missile tests, says Chief of Staff.”

Anyway, I think yesterday’s missile test has been pretty well publicized, and only some fish suffered for it directly. Atsushi thinks the motivation was transferred pain over soccer. He’s only half joking.

You know how the Japan Post privatization proposal was presented to the LDP last week? It’s still, not unpredictably, stuck there:

A group of 101 Liberal Democratic Party lawmakers met Wednesday to reiterate their opposition to the government’s postal privatization plan and ruled out any compromise on the issue.
Prime Minister Junichiro Koizumi meanwhile renewed his pledge not to change the postal reform framework adopted by his Cabinet earlier this month.

The standoff between Koizumi and his opponents in the LDP, of which he is president, is making it increasingly difficult for the government to meet its goal of submitting its postal privatization bills to the Diet by the end of the month.

At Wednesday’s meeting, organized and chaired by former House of Representatives Speaker Tamisuke Watanuki, the lawmakers adopted a resolution opposing the government’s plan and released their own outline to reform Japan Post while keeping it a semigovernmental corporation.

Someday when my stomach is less on edge, we’ll talk about Japanese semi-governmental corporations in all their resource-hoovering glory. Suffice it to say that, while “semi-governmental” sounds like a nice, friendly compromise, in execution it ends up increasing the number of people who have access to the goodies and decreasing the number of people who feel compelled to husband them. The Sankei did report that not everyone who went to Watanuki’s “study session” last week symptathized with his anti-privatization position (one is cited as saying that because he’d received his invitation from the leaders of his faction, he felt unable to refuse it). But there were 96 Diet attendees there, and 101 who joined him in his resolution this week, so maybe he was pretty persuasive.

In any case, Prime Minister Koizumi has been adamant that the proposal not be doctored before officially becoming a Diet bill. The deadline he set was the end of April, so there’s still plenty of time for fun.

The editorial in this morning’s Nikkei was about Japan Post reform and addresses several sticking points:

Prior [to the release of the plan] the LDP compiled a document called “Modes of Thinking for Japan Post Reform.” In it, there were several problems with the government’s proposal indicated, including (1) the corporation that will be financed by the government will be state-owned and privately-managed, and so there are fears that its projects will fall prey to corruption, (2) the division of Japan Post into four companies simply increases the number of positions available for 天下り (amakudari: lit., “descent from the heavens”), (3) it has not been proven that the four new companies (posts, savings accounts, insurance, and counter services) will really be independent.

Amakudari is similar to what we’d call a revolving door: the system in which high government officials retire to semi-public management or “consulting” jobs in which they can use their accumulated connections and influence to manage resources. Civil servants make less than they could with equivalent credentials in the private sector because the assumption that they’ll retire in their mid-50s and take more-lucrative jobs related to their fields. Government officials have complained about attempts to reform the system because–and it’s hard not to sympathize with them to some degree–they’ve all gone through their entire careers with the understanding that things would work this way. On the other hand, the number of redundant positions boggles the imagination, and attempts at reform are seen as suspect by the Japanese people.

Those planning the privatization of Japan Post talked this weekend about selling off in stages the remaining government-held stake in the two new firms that will handle postal savings and life insurance. Some were still balking at the idea of offloading the entire government stake in ten years, but an agreement appears to have been reached: all government shares are to be sold by the end of March 2017. The government will unveil its basic proposal tomorrow after presenting it to the leaders of the LDP and Shin-Komeito.

BTW, people occasionally ask me how much money we’re talking about here. The answer: a WHOLE LOT OF MONEY. There are about ¥230 trillion (US $1.9 trillion) in postal savings accounts. That’s between one-third and one-half of the personal savings in Japan, and the “bankers” that manage it are in a special department of the Ministry of Finance. Much of it has been invested in government bonds that no one else is buying, much of the remainder serves as a sort of slush fund for favored government projects, and the rest is invested elsewhere. This Q&A-style piece from The Japan Times last fall gives some of the figures and major problems (consider that I haven’t discussed the insurance money). I’m in favor of privatization, but–like bank, pension, health care, and social insurance reforms–it’s going to be painful.


Added at 19:20: PM Koizumi has announced his joy over the completion of the proposal. Something I’ve kept forgetting to mention, though it’s at the bottom of most articles about the issue: if the new computer systems aren’t ready in time, the beginning of the switchover will be delayed by up to six months.



Added on 5 April: The Ministry of Internal Affairs and Communications, naturally, was not looking forward to the loss of control–its objections are not surprising. The somewhat thornier issues involve how to ensure that mail delivery continues to isolated communities, and they’ve been around for months. There are still questions about the plan that raise California-energy-fiasco-type worries. From the Yomiuri :

After the two units are fully privatized, the holding company will be allowed to buy back some of the shares it sells. In addition, the outline includes a provision that allows the four postal entities to hold shares in each other after the privatization process ends in 2017.



The outline also stipulates the creation of a 1 trillion yen fund to cover the privatized entities’ potential losses in providing postal savings and life insurance services in less populated areas as part of their universal service obligations.

So they’re being privatized but only partially deregulated. From what I can tell, the opening is also made for a version of 持ち合い (mochiai: “mutual-shareholding“), a Japanese business practice that may, as that page states, “[create] a sense of shared responsibilities and obligations of each other’s business success” but also makes you wonder what the point of having four separate companies would be.

Japan Post reform is still in process. Yesterday morning, the big news was of PM Koizumi’s growing impatience with the reform panel:

The outline is based on a plan to place the postal services under a holding company in April 2007 after dividing them into four units–mail delivery, counter services, postal banking, and postal insurance.

Government shares in the postal bank and the postal insurance firm would be sold by the end of March 2017.

The outline also includes the following points to gain LDP support in the negotiations:

— The related bills will spell out that post offices will be established around the country to provide nationwide services and a ministerial ordinance will be issued to require post offices in remote areas not to close.

— To maintain financial services, the postal bank and the postal insurance firm will be required to contract the counter services firm as their agent for the time being as a condition for receiving a license. After 2017, a fund to cover deficits in provincial areas will be established.

— A system will be introduced to select postmasters for special post offices.

How to divide up Japan Post’s current services has been one of the major remaining sticking points. The proposal is supposed to be submitted to the LDP on Monday.

Japan’s spy satellite development program combines technological research, communications infrastructure, and procurement of components from international sources. It is, therefore, the perfect project to fall prey to just about every weakness in Japanese organizational behavior.

You have a mishmash of government ministries, private corporations, and neither-here-nor-there public corporations in charge, which maximizes the number of people who can put claims on funds without being questioned too closely:

About 5 billion yen that went into the development and manufacture of Japan’s first spy satellites was siphoned off by middlemen who added little value, sources said.

…

The three independent institutions involved in the spy satellite procurement are the Japan Aerospace Exploration Agency (JAXA), the New Energy and Industrial Technology Development Organization (NEDO) and the National Institute of Information and Communications Technology (NICT).

The chartered corporation is the Japan Resources Observation System Organization (JAROS).

…

The former Science and Technology Agency was in charge of the satellite and rocket. The former Ministry of International Trade and Industry (MITI) was given authority over the satellite radar, and the former Posts and Telecommunications Ministry was in charge of data transmissions.

Get it straight–there will be a quiz later.

You have an initiative that sprang from ad hoc worries and that no one bothered to fit into an overall plan or mission:

The Cabinet of then Prime Minister Keizo Obuchi approved acquisition of a spy satellite in November 1998.

The main catalyst for that move was North Korea’s launch in August 1998 of a Taepodong missile over the Japanese archipelago.

You have the sub-contracting of work in chains that recede into the infinite distance, sometimes crossing in odd places:

NEDO, for example, commissioned JAROS to do most of its work, such as radar design.

And you have the involvement of the Mitsubishi conglomerate, which just cannot stop getting itself in trouble lately (and frequently in ways that result in fires and explosions at inopportune moments–just what you want in a satellite):

The spy satellites were manufactured by Mitsubishi Electric Corp.

Created ostensibly to provide guidance, the process actually led to some money being used to pay the difference in salaries for Mitsubishi Electric employees loaned out to the intermediaries, sources said.

Further, sources said that those institutions did little of the actual oversight work.

That Japanese link above, BTW, is to a story about soil pollution in Osaka by Mitsubishi Estate and Mitsubishi Materials for housing development; several executives are being investigated.

Notice that there’s no mention of the Japan Defense Agency or the SDF anywhere in the article. Presumably, they’re the ones that are actually going to be using the satellites? Did they have a say in things? If not, why not? Then again, given the size of the crowd, maybe it’s just that no one noticed their absence.